In the early days of bitcoin, Mt. Gox was the most well-known and widely used cryptocurrency exchange. Despite being defunct after filing for bankruptcy in 2014, “Mt. Gox” is still a common topic of discussion and often referenced as the incident that created a multi-year bear market. Mt. Gox has become almost a curse word in the cryptosphere. Rightfully so, as revealed Thursday, Mt. Gox may still be connected to multiple market crashes starting in December of last year.
The Mt. Gox hack that led to the company going under, saw over 850,000 bitcoins stolen. Just under 200,000 bitcoins were discovered, which have been held by a Japanese trustee overseeing the bankruptcy case. Courts decided that creditors were due a sum of $5.5 million. To be able to return the funds to creditors, the trustee has begun selling the bitcoin - in large quantities - at multiple points starting in September 2017 and ending in February 2018.
These bitcoin sales, which were sold at an average market price of around $10,000, also may have been responsible for the massive cryptocurrency market crash in early February that brought bitcoin’s price tumbling down to $5,900 before bouncing.
According to blockchain data, a bitcoin address tied to Mt. Gox shows 2,000 bitcoins were moved on December 18th, the same day that bitcoin’s price dropped $1,000 and sent bitcoin into a downtrend channel. The trustee likely learned of bitcoin reaching an all-time high of $20,000 a day prior, and sold the bitcoins to maximize the value returned to creditors.
Another move of 6,000 bitcoins happened on December 22, causing over a $5,000 drop in price. Next, on January 17, the trustee unloaded 8,000 more. Another 6,000 were sold on the 31st, but as the market crashed further, the trustee dealt a lethal blow on February 5, selling 18,000 bitcoin in total, dragging the market down to the lowest low since bitcoin’s peak in December - the fall has been largely influenced by the former Mt. Gox bitcoin.
The part that has the market in turmoil right now: 165,000 bitcoin remain in this trustee’s possession. The creditors have been covered, so there should not be any reason to continue to sell, but the fact they exist could - much like Mt. Gox - prove to be a gloomy cloud hanging over the market for some time.